US Subsidies Are Appealing to German Companies - Survey

German companies

The Biden administration’s Inflation Reduction Act to promote climate-friendly technologies is attracting German companies to the United States, a survey of the German Chamber of Commerce and Industry DIHK released on Wednesday showed.

According to the DIHK survey among 2,400 companies from all sectors, one in 10 German companies is already planning to relocate production to other countries.

The report showed that North America, and particularly the U.S., have become more popular for business.

EU leaders have expressed concern that local content requirements of much of the $369 billion of subsidies in the IRA would encourage companies to abandon Europe for the United States.

According to the survey, 23% of vehicle manufacturers and suppliers consider relocating production. Under Washington’s scheme, new electric vehicle tax credits apply to those with final assembly as well as key inputs made in North America.

Trade barriers are increasingly causing problems for German companies operating internationally. Of the companies surveyed, 56% complained about trade barriers, the highest figure since the survey started 18 years ago.

“We clearly see a sad trend toward more protectionism,” said Volker Treier, trade chief at the DIHK.

Of the companies surveyed, one in five feels discriminated by local content regulations, as those included in the U.S. IRA.

Sanctions against Russia and Belarus by the European Union and other countries, as well as counter-sanctions in connection with the Russian war in Ukraine, are also creating challenges for more than half of the German companies surveyed.

“Our survey confirms the new reality we are facing since the war of aggression started,” Treier said. He forecasts German real export growth of 2.5% in 2023, one point below the average growth during the previous decade.

BERLIN (Reuters)

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